Is It More Affordable to Buy a Central PA Home Now?

Is It More Affordable to Buy a Central PA Home Now?Since mortgage rates hit rock bottom in 2020 and then climbed to higher than they have been in over a decade, and slightly back down again. But nowhere near where people would have hoped, home affordability has been a concern of several central PA homebuyers. 

A question on many people's minds is when mortgage rates will decrease and when homes will be more affordable. Though home affordability has been tight for the last few years, there are signs that the market is easing up and more affordability is on the horizon.

Three Factors that Impact Affordability 

Mortgage Rates

One of the biggest impacts on home affordability in the last 2 or so years is the increase in mortgage rates. In 2023 mortgage rates went completely in a different direction than most experts predicted. Many predicted that by the end of 2023 mortgage rates would come down to the 5% range. Instead, they bounced up and down and back up again hitting the high 7% range in November 2023. Currently, they are still in the 6% range which is significantly higher than projected. 

But the good news about the rate roller coaster is that predictions are being made more conservatively and they are still predicted to come down as the year progresses. Any drop in rates is good news for home affordability. 

Prices/ Home Values

Another big factor behind home affordability is the price of the home. Home prices skyrocketed as mortgage rates fell and buyers flooded to the market creating crazy demand. Home prices have since slowed down in their price appreciation, but are still rising. The good news is that home prices are back to a more normalized rate of increase. Looking back over several decades home prices almost always increase, because owning property is always something in demand. It is one of the most solid investments an American can make.

Average Wages

Wages are on the rise looking over economic numbers from around the country. This is a very helpful factor in home affordability. Data from the Federal Reserve has shown that wages are climbing at a faster pace. Wages took a sharp downturn during the pandemic and many Americans fell on difficult times. The good news is they have been on the rise since just before 2021 and have been continuing to increase at a pace that is far above the Wages Index Trendline.

Looking back to the year 2006 wages were above the trendline and took a downturn in 2009. From the years 2009 to 2019, wages were just below the trendline and met up with the trendline through the course of 2019 staying steady with that trendline until the beginning of 2020. 

So are homes becoming more affordable? The answer in short is yes. Home prices are growing but at a more stable rate, mortgage rates are high but not expected to spike but continue to slowly decrease, and wages are increasing. Home affordability is improving, slowly but it is a hopeful movement for homebuyers.

If you are looking for a home in central PA, I am happy to help get your home search off on the right foot. Contact me any time with any central PA real estate needs. I am here to help make your home-buying process as informed and stress-free as possible. Let's get started finding a home you will love at an affordable price. 

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